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Standard Water Control Systems, Inc v. Jones

Court of Appeals of Iowa

February 6, 2019

STANDARD WATER CONTROL SYSTEMS, INC., Plaintiff-Appellee,
v.
MICHAEL D. JONES and CORI L. JONES, Defendants-Appellants.

          Appeal from the Iowa District Court for Polk County, Lawrence P. McLellan, Judge.

         In an action to enforce a judgment arising from a mechanic's lien, defendants appeal the district court's decision finding they waived their homestead rights. REVERSED AND REMANDED.

          John F. Fatino, Jonathan Kramer, and Zachary J. Hermsen of Whitfield & Eddy, P.L.C., Des Moines, for appellants.

          Jodie C. McDougal and Elizabeth R. Meyer of Davis Brown Law Firm, Des Moines, for appellee.

          Heard by Tabor, P.J., and Mullins and Bower, JJ.

          BOWER, JUDGE.

         In an action by Standard Water Control Systems, Inc. (Standard Water) to enforce a judgment arising from a mechanic's lien, Michael and Cori Jones (the Joneses) appeal the district court's decision holding they waived their homestead rights. We affirm the district court's finding Iowa Code section 561.21(3) (2013) does not allow a homestead to be sold to recover attorney fees entered as part of a judgment against a home in an action to foreclose a mechanic's lien. We reverse the decision of the district court on the issue of whether the Joneses waived their homestead rights and remand for further proceedings.

         I. Background Facts & Proceedings

         This is the third appeal in the lawsuit between the parties. Because the issues in this case involve a discussion of judicial estoppel, the law of the case doctrine, and res judicata, we must review the procedural history.

         In 2013, the Joneses entered into a contract with Standard Water to waterproof the basement of their home in Des Moines. While performing the work, Standard Water struck a water line and sewer line, causing damage to the property. The Joneses did not permit Standard Water to complete the work. Standard Water submitted a bill for $5400, which the Joneses refused to pay. Standard Water filed notice of a mechanic's lien.

         On October 30, 2013, Standard Water filed an action against the Joneses, seeking to foreclose the mechanic's lien under Iowa Code chapter 572 and requested the court issue a special execution for the sale of the property. Standard Water also raised claims of breach of contract, quantum meruit, and unjust enrichment. The Joneses raised several affirmative defenses and filed counterclaims against Standard Water-none of which involved the Joneses' homestead rights.

         The case was tried to the court, which found Standard Water's actions were not a breach of duty or standard of care, and it was entitled to foreclose the mechanic's lien. The court entered judgment against the Joneses for $5400 plus interest. The court determined the amount of the judgment would be reduced by $500, to $4900, if Standard Water did not complete the work. The court denied the Joneses' counterclaims.

         The district court determined Standard Water should be awarded attorney fees. Standard Water submitted an affidavit requesting attorney fees of $56, 014.25, plus costs. The Joneses resisted the request for attorney fees, claiming the amount was unreasonable in light of the amount of the judgment and the value of the home-which had an assessed value in 2014 of $55, 000. The district court awarded Standard Water attorney fees of $43, 835.25 and costs of $299.04. The court entered judgment against the Joneses and issued a special execution for the sale of the property, directing a sheriff's sale.

         On March 13, 2015, the Joneses appealed the district court's decision. In the interim, the Joneses decided to not have Standard Water complete the project and the district court reduced the judgment by $500, to $4900, plus attorney fees and costs.

         On August 3, 2015, while the appeal was pending, Standard Water initiated proceedings for a special execution and sheriff's sale of the property. The notice advised the Joneses "if the described real estate includes the homestead . . . defendant must file a homestead plat with the Sheriff within ten (10) days after service of this notice, or the Sheriff will have it platted and charge the costs to this case." See Iowa Code § 561.4, .5. The property was sold on October 21, 2015, for $45, 000 to Standard Water. There was no discussion of the Joneses' homestead rights at the time of the sale.

         In Standard Water Control Systems, Inc. v. Jones, 888 N.W.2d 673, 677‒ 79 (Iowa Ct. App. 2016), we determined: (1) the notice of commencement of work filed by Standard Water was not untimely under section 572.13A; (2) the contract did not contain an improper indemnity clause and was not void on this ground; and (3) the award of trial attorney fees was excessive. We vacated the award of attorney fees and remanded to the district court for additional fact-finding on this issue. Standard Water, 888 N.W.2d at 679.

         Based on our decision, the Joneses filed a motion to set aside the sheriff's sale, noting the attorney fee award, which was a large portion of the judgment, had been vacated. Standard Water resisted the motion to set aside the sale. In their response to the resistance, filed on September 20, 2016, the Joneses stated the property was their homestead. The district court determined the sheriff's sale should be set aside. The court stated, "Finally, this is the Jones[es]' home and to allow the sheriff's sale to stand knowing they cannot afford to exercise their right to redeem effectively makes them homeless."

         On remand, Standard Water asked the district court to affirm its previous award of trial attorney fees and sought $29, 144 in appellate attorney fees and costs. Additionally, it asked the court to reverse the order granting the motion to set aside the sheriff's sale. The Joneses resisted Standard Water's requests. The district court reduced the amount of trial attorney fees to $41, 670.25. The court determined the Joneses should pay $17, 283.44 for Standard Water's appellate attorney fees. The court also found, "[A]ny action with regard to the property shall proceed as if there has not been ...


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